Multilateral replenishments and global development partnerships

Programs 1.9, 1.11 and 1.12

Overview

The department works with multilateral development organisations and global development partners because their expertise, scale and geographic reach allow Australia to leverage results beyond what can be achieved through purely bilateral means.

These organisations play a critical role in delivering development outcomes. Our engagement with them ensures Australia’s, and our region’s, priorities are considered, reflected and acted upon in international agreements, priorities and assistance.

The department is introducing ‘Multilateral Performance Assessments’—a new system for ensuring our multilateral partners deliver results and focus on issues of priority for Australia.

Global development

Australia worked with international partners to develop and agree a global post-2015 development agenda (the 2030 Agenda for Sustainable Development). This will provide a set of international development goals and targets, which, while non-binding, will influence and drive development outcomes and financial flows to 2030 and beyond. The department focused on ensuring a set of goals and targets that emphasise economic growth, poverty reduction, gender equality and peace and governance.

We also contributed strongly to negotiations on an international development financing action agenda, to be agreed in July 2015 at the Third International Conference on Financing for Development. The framework emphasises the need to fully utilise the suite of finance available to support development, including increasing domestic resources (through effective tax systems), private sector investment and leveraging ODA.

Policy coordination funding

The department provided $373,000 to the UNDP-managed Asia Pacific Development Effectiveness Facility (AP-DEF) to help countries in our region develop strategies to manage development finance from a range of different sources. It also helps the AP-DEF facilitate regional dialogue and cooperation, and share experience between countries on development effectiveness and cooperation.

We provided $50,000 to the Financing for Development Trust Fund. The fund helped governments from least developed countries and small island developing states attend the Third International Financing for Development Conference and helped ensure that the voices of the most vulnerable countries were part of this important event.

Multilateral development banks and replenishments

World Bank Group

The World Bank Group (WBG) is an important partner for meeting our objectives of reducing poverty and promoting economic growth. Australia contributed an estimated $487.7 million to the WBG. This comprised $211.7 million in core funding to the International Development Association (IDA), and a total of $276 million in non-core funding to implement joint programs. Our advocacy has helped increase World Bank funding to our region.

Australia’s engagement with the WBG is an important part of our economic diplomacy. Australia supports the WBG’s ‘Doing Business Reports’, which measure government regulations that enhance or constrain business activity globally and foster competition among governments to create the most attractive business environments. Australia also partnered with the WBG on its Global Benchmarking of Public Procurement Program to help identify areas for reform and improve public procurement, an area on which governments spend trillions of dollars annually.

International Finance Corporation

The International Finance Corporation (IFC) is the WBG’s private sector financing arm, and its emphasis on private sector innovation in infrastructure, governance, education, health, gender equality and agriculture matches Australia’s priorities. Australia provided $34.5 million to IFC, a four-fold increase on last financial year’s contribution. With Australia’s support, the IFC implemented a three-year program (launched in 2013) to help the central banks of Pacific Island countries develop national ‘payment system’ laws. This will give 1.2 million people access to easy, safe and reliable electronic banking and remittances.

The International Development Association

Australia contributed $211.7 million to the IDA, the arm of the WBG that provides highly concessional loans and grants to the world’s 77 poorest countries, 23 of which are in the Indo–Pacific region. The IDA’s emphasis on gender equality and inclusive growth align well with Australia’s priorities.

Our advocacy helped secure around US$8.4 billion to South Asia and US$2.1 billion to East Asia and the Pacific in IDA funding for 2013–14 (published October 2014). Since 2014, it also helped mobilise US$50 million in ad hoc crisis support for Vanuatu and Tuvalu following Tropical Cyclone Pam, and US$1.62 billion to halt the spread of the Ebola virus, improve public health systems, and mitigate the economic impacts of the disease in affected countries.

Asian Development Bank

Our $122.2 million core contribution to the Asian Development Bank (ADB) helped to increase access to finance for more than 44,000 poor women and men, train more than 36,400 teachers, and build or upgrade more than 530 kilometres of roads.

We also provided $118.5 million in funding for joint projects with the ADB at country, sector and regional levels, mainly targeting infrastructure, health, education and private sector development in the Greater Mekong subregion and in the Pacific. Our advocacy and support helped to deliver an agreement to merge the ADB’s two financial capital arms from 2017. This is a major reform which will increase the ADB’s lending by 50 per cent.

Asian Infrastructure Investment Bank

Australia signalled its intention to join the Asian Infrastructure Investment Bank (AIIB) in June 2015. The AIIB is a new multilateral bank that will invest in infrastructure in the Asian region. In the AIIB negotiations, Australia advocated high governance standards and robust environmental and social safeguards. Our advocacy will help make the AIIB more effective and has strengthened its governance, accountability and transparency. The AIIB is expected to be operational by the end of 2015. We will continue to work with China and other shareholders on its design and operations.

Other multilateral development Funds

Health

The department worked with the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) to stop the spread of these diseases in the Indo–Pacific region. We used our Global Fund board membership to promote the fund’s effectiveness in the region. Australia has pledged $200 million to the Global Fund’s 2014–16 replenishment. In 2014–15, $105 million of this contribution was disbursed, which helped provide antiretroviral therapy for 87,600 people with HIV/AIDS, treat 147,600 people with tuberculosis, and distribute 5,400,000 insecticide treated bed nets to prevent malaria.

The department continued to invest in Gavi, the Vaccine Alliance, to extend the reach of our health program and leverage funds from the private sector. Our $50 million contribution helped immunise 2.3 million children in developing countries. We also contributed $14.1 million to the International Finance Facility for Immunisation to raise funds for vaccines. We used our board membership to ensure Gavi was governed effectively. A priority issue was to reform Gavi’s graduation and eligibility policies. We advocated a smoother transition for countries graduating from Gavi support to allow immunisation programs in those countries to become self-sustaining.

Education

The department works with the Global Partnership for Education (GPE) to cultivate productivity and economic growth in our region by increasing access to education. We used our seat on the GPE Board to help design and introduce a new funding model. This will help recipient countries develop better education sector plans and strengthen the link between achieving results and funding. In 2014–15, Australia made its final payment to GPE’s first replenishment (2011–14) of $100 million. In 2014, GPE also launched its second replenishment (2015–2018) to which Australia pledged $140 million.

Environment/climate change

Australia committed $200 million to the Green Climate Fund (GCF) to support action on climate change in developing countries, including private sector-led economic growth in the Indo–Pacific region. A first tranche payment of $70 million was paid to the GCF in June 2015, along with a further $75,000 to support a GCF regional workshop for representatives of Pacific Island countries. The GCF is expected to begin funding projects in November 2015.

We provided $19.3 million to the Global Environment Facility (GEF) to provide a range of grants to the Indo–Pacific region that will improve agricultural productivity, sustainable fisheries and water management of poor communities dependent on the natural environment. The department also used its GEF Council membership to push for, and achieve, more streamlined systems and a better articulation of results and transparency by the GEF.

We contributed $18.2 million to the Global Green Growth Institute (GGGI) to build resilience to climate-related shocks and manage the impact of climate change in the Indo–Pacific. This established Australia as a contributing member of GGGI until the end of 2016. Through 2014–15, GGGI partnered with developing countries to embed economic growth pathways that use natural resources sustainably, are less carbon intensive, and more resilient to climate change.

In partnership with the Department of the Environment, we renewed our commitment to the Montreal Protocol Multilateral Fund. Australia pledged $13.9 million to the fund’s ninth replenishment (2015–17) to support developing countries phase-out ozone-depleting substances from industry practices.

Working with others to enhance multilateral effectiveness

The department has developed the Multilateral Performance Assessment process to assess the multilateral organisations to which Australia gives significant funding. This is in line with target 7 of Making Performance count: enhancing the accountability and effectiveness of Australian aid. We also pursued our effectiveness agenda through multilateral forums by maintaining our active role in the Multilateral Organisation Performance Assessment Network (MOPAN). MOPAN is a network of 17 bilateral donor countries with a common interest in assessing the effectiveness of the major multilateral organisations they fund. In 2015, the new MOPAN 3.0 methodology, with its greater focus on performance and development effectiveness, will begin with an assessment of 12 multilateral organisations.

OECD DAC

One of the department’s objectives is to extend Australia’s influence and ensure development organisations reflect best practice approaches. To do this, Australia provided $500,000 to the OECD’s Development Assistance Committee (DAC) to modernise the way it defines international aid and the statistical system used to measure it. With Australia’s support, the DAC also agreed to rules that encourage the provision by donors of concessional loans on more favourable terms for the poorest countries.

Australia chaired the DAC network on gender equality and co-chaired its networks on evaluation and governance. We also contributed to six DAC peer reviews of other donors that identified and disseminated good development practices.

We combatted international tax evasion through support to the OECD Tax and Development Programme. This program gives practical tools and guidance to help boost revenue collection. Developing countries applying such guidance have demonstrated considerable returns on investment. With Australia’s input, the OECD’s transfer pricing program gave advice to 10 developing countries, including Vietnam and Cambodia, which helped them collect over US$140 million in additional revenue.

Development partners

The department continued to maximise the leverage and reach of its development investments by partnering with other leading donors.

In April 2015, we signed a new Partnership Arrangement for International Development with the Canadian Department of Foreign Affairs, Trade and Development. The arrangement will facilitate further collaboration on economic growth and sustainable development, global health issues, gender equality and global development policy agendas. The department held senior development talks with Germany, the United States and the United Kingdom and participated in the inaugural Australia–EU Development Dialogue to discuss opportunities for coordinated action to enhance the impact of joint development assistance. These formal partnerships and dialogues underpin practical cooperation with our bilateral partners.

The department also continued to explore opportunities to engage with new partners who bring their own creativity and resources to bear in solving development problems. For example, we worked closely with the Bill and Melinda Gates Foundation on promoting financial inclusion, food security and health.

Outlook

Australia’s aid policy focus on growth-enabling areas, including aid-for-trade, infrastructure, women’s economic empowerment and harnessing all sources of development finance, is well aligned with the 2030 Agenda for Sustainable Development. The department is positioned to work with our partners to incorporate this agenda, including the Financing for Development framework into development policies, processes and programs.

We will support the merger of the ADB’s two financial capital arms and financial and structural reforms occurring in the World Bank to increase the resources they have available to support developing countries. We will push for successful replenishments of the development funding arms of the ADB and World Bank, and ensure that Australia’s priorities, especially an Indo–Pacific focus, are reflected in the outcomes.

As a founding member of the AIIB, we will continue to work with others on its design and operation. Securing quality climate projects for developing countries in our region will be a focus of our board representation on the Green Climate Fund and membership of the Green Growth Institute. We will also continue our advocacy for Australia’s priorities in other sectoral funds, with a strong focus on ensuring they work with partner governments to ensure sustainable financing and programs.

A priority across our work will be to promote development effectiveness throughout the global development system and in cooperation with other leading development partners.